Offshore Development In A Global Company

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The following presentation describes a dilemma that every global company has before taking the offshore decision: create an in-house offshore software development center (AKA captive unit) or engage with an offshore software development provider.

The presentation outlines the pros and cons and the various considerations in reaching the right decision for you. This presentation was given in one of the ISDM forum sessions (Israeli Software Development Managers forum).

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Offshore Development In A Global Company

  1. 1. Offshore Development in a Global Company
  2. 2. The Offshoring Decision <ul><li>Why investing in creating an offshore Branch if we can: </li></ul><ul><ul><li>Work with an outsourcing vendor on ODC basis </li></ul></ul><ul><ul><li>Work with an outsourcing vendor on T&M basis </li></ul></ul><ul><ul><li>Work with an outsourcing vendor on a project/fixed price basis </li></ul></ul>
  3. 3. The Offshoring Decision In house vs. Outsourcing
  4. 4. The Offshoring Decision <ul><li>Expect internal opposition to the move </li></ul><ul><ul><li>People will feel threatened </li></ul></ul><ul><li>Market the change to the onsite stuff </li></ul><ul><ul><li>Advance in the career ladder by being responsible of an Offshore team/group/project </li></ul></ul><ul><ul><li>Focus on innovative and core activity and not the tedious repetitive work </li></ul></ul><ul><ul><li>Gaining experience in a global company </li></ul></ul>
  5. 5. Location, Location, Location <ul><li>Where do we open the branch: </li></ul><ul><ul><li>Local Labor cost </li></ul></ul><ul><ul><li>Local Universities level and proximity </li></ul></ul><ul><ul><li>Local level of English </li></ul></ul><ul><ul><li>Corruption – is it feasible doing business there? </li></ul></ul><ul><ul><li>Proximity to international airport </li></ul></ul><ul><ul><li>Number of High-Tech companies in the region </li></ul></ul><ul><ul><ul><li>HR Competition </li></ul></ul></ul><ul><ul><ul><li>IT Infrastructure </li></ul></ul></ul>
  6. 6. Onsite-Offshore Team Structure <ul><li>Horizontal (onsite management-offshore R&D): </li></ul><ul><ul><li>High rate of interaction between onsite and offshore teams </li></ul></ul><ul><ul><li>Bitterness of the offshore employees </li></ul></ul><ul><ul><li>Less productive </li></ul></ul><ul><li>Vertical (offshore management-offshore R&D) </li></ul><ul><ul><li>Risk of loosing control </li></ul></ul><ul><li>Best Practice – vertical teams peripheral projects </li></ul>
  7. 7. Structured Development Process <ul><li>Well defined Development Process </li></ul><ul><ul><li>Roles and responsibilities </li></ul></ul><ul><ul><li>Well defined documentation </li></ul></ul><ul><ul><li>Just enough documentation </li></ul></ul><ul><li>Agile Development / Light CMM </li></ul>
  8. 8. Choose Offshore Projects Wisely <ul><li>Not everything can and should be offshored! </li></ul><ul><ul><li>Minimal interaction with onsite groups </li></ul></ul><ul><ul><li>Well defined interfaces </li></ul></ul><ul><ul><li>Loosly-coupled architecture – SOA! </li></ul></ul>
  9. 9. Cultural and Mentality Gaps <ul><li>This is the number one problem of offshore in general – a major hidden cost </li></ul><ul><li>Acknowledge the fact that they don’t think, behave and act like us! </li></ul><ul><li>Encourage social activity </li></ul><ul><li>Ambassadors exchange program (next…) </li></ul><ul><li>Cultivate corporate culture </li></ul><ul><ul><li>Procedures, Intranet and even blogs </li></ul></ul><ul><li>Positive Strengthening - encourage questions </li></ul>
  10. 10. Effective communication <ul><li>Number two problem of Offshore Development – yet another hidden cost </li></ul><ul><li>Exchange ambassadors </li></ul><ul><ul><li>Send offshore stuff for onsite training </li></ul></ul><ul><ul><li>Send team/group leaders to get to know their offshore stuff </li></ul></ul><ul><ul><li>Send business analysts and project Managers to offshore </li></ul></ul><ul><ul><li>Send offshore stuff to customers </li></ul></ul>
  11. 11. Effective Communication <ul><li>Every communication tool has its pros and cons – use all of them wisely: </li></ul><ul><ul><li>Documentation </li></ul></ul><ul><ul><li>E-mails </li></ul></ul><ul><ul><li>Voice calls </li></ul></ul><ul><ul><li>Audio conferencing </li></ul></ul><ul><ul><li>Video Conferencing </li></ul></ul><ul><ul><li>Instant Messaging </li></ul></ul><ul><ul><li>Wiki </li></ul></ul><ul><ul><li>Web Demo Systems (such as WebEX) </li></ul></ul>
  12. 12. Fighting Attrition Rate <ul><li>This is the number three problem of offshoring projects – again – hidden cost </li></ul><ul><li>Attrition rate is very high in developing countries </li></ul><ul><li>Provide on-going trainings, preferably ones with world-wide certification </li></ul><ul><li>Provide titles for employees to make them feel significant </li></ul><ul><li>Create personal programs for employees </li></ul><ul><ul><li>Housing, Loans </li></ul></ul><ul><ul><li>Cars </li></ul></ul>
  13. 13. Q&A <ul><li>Q&A </li></ul><ul><li>Aviram Eisenberg </li></ul><ul><li>[email_address] </li></ul><ul><li>+972 52 6005161 </li></ul><ul><li>www.igniteoutsourcing.com </li></ul>

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